CH150500 - Penalties for Failure to Pay on Time: Overview

»Ê¹ÚÌåÓýapp law requires a person to pay their tax, or tax which they are required to send to HMRC, on or before the due date. When a person fails to pay the full amount of tax by the due date, they may become liable to a penalty or penalties.

Penalties for failing to pay on time currently only apply to

  • Pay as you Earn (PAYE), National Insurance Contributions (NIC) and Student Loan deductions
  • Construction Industry Scheme (CIS)
  • Bank Payroll Tax (BPT)
  • Registered Pension Scheme (RPS)
  • Income tax and Capital Gains Tax (IT & CGT)
  • Machine Games Duty (MGD)
  • Annual Tax on Envelope Dwelling (ATED)
  • Soft Drinks Industry Levy (SDIL)
  • Plastic Packaging Tax (PPT)

For the purposes of this guidance ‘tax� includes PAYE, NICs and other duties, and ‘assessment� includes determination and decision.

A person may be liable to a penalty if they fail to pay on time, unless they

  • have a reasonable excuse for not doing so, and
  • make payment in full without unreasonable delay after the excuse ends.

»Ê¹ÚÌåÓýapp penalty is calculated differently depending on the tax involved and the length of time that the tax is outstanding. Broadly the types of penalty are

  • a default penalty for the basic failure to pay in full and on time, and
  • one or more further penalties if the failure continues beyond 6 or 12 months or in the case of SDIL and PPT 5 or 11 months.

»Ê¹ÚÌåÓýapp amount of the penalty is a percentage of the tax that is unpaid at the due date. »Ê¹ÚÌåÓýapp calculation is different for annual tax periods and monthly or quarterly tax periods. »Ê¹ÚÌåÓýapp penalty regime is progressive, which means that an amount of unpaid tax may attract more than one penalty if the failure continues beyond certain dates.

When a person has incurred a penalty for failure to pay in full and on time, we issue a penalty assessment. »Ê¹ÚÌåÓýapp person can appeal and is entitled to a review. Where necessary the appeal will be heard by the tribunal.

In certain circumstances, we can agree to defer a penalty or agree to a special reduction, see CH170000.

»Ê¹ÚÌåÓýapp penalty provisions in Sections 100 to 103 of TMA 1970 do not apply to a penalty under Schedule 56 FA 2009.

FA09/SCH56